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Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Any economic analysis should include the continuing replacement of domestic workers due to the trillion-fold price-performance improvement in computing over the past five decades. The information technology revolution has enabled that replacement not only through automation but by enabling outsourcing.

It is obvious that our current economic/political system would be unworkable when the machines do all the work and there are no employees. Well, if we look at the reduction in the non-managerial worker payrolls from 52% to 42% of GDP since 1972, one concludes that we are already 20% of the way there, and the seams are already showing in rising inequality and political radicalism.

The self esteem and motivation of workers is enhanced much more by increased pay rather than federal income subsidies. Also, the tax and redistribute model leaves the redistribution to the political whims of the current administration. Far better to put into practice a methodology which raises the portion of a corporation's gross profits allocated to non-managerial workers.

Such a scheme would set the minimum wage to a living wage and set a profit to payroll cap on a corporation based on their W2 and earnings history already in the hands of the government. Any profits in excess of the cap would be fined at a rate of 100%. The profit to payroll caps of all corporations would be reduced gradually until non-managerial payrolls again reached the 50% of GDP that existed during our strongest economic and worker income growth periods.

Worker dignity and self-esteem would be restored, while the additional wages would again strengthen our economy, reducing the need for dangerous easy personal credit and allowing interest rates to at last return to normal levels. The executive committee would have the power to apply the additional required payroll to those areas which would provide the best payoff for the corporation.

Taxes would still need to be collected but would no longer be needed to pay subsidies for the working poor.

The Ominous Welfare Gap Between the Haves and the Have Nots:
A cursory analytical look at Thomas Piketty's Thesis clearly suggests that the intrinsic nature of Capitalism ensures that the rich will get richer and the poor poorer, ad infinitum, till annihilation of the poorest, in any society in any country, unless taxation through a sole consumption tax is used to regularly redistribute the wealth created in all societies, within societies, in such a way as to preempt consumption by the poorest from falling below the threshold of autonomous survival with monotonically increasing welfare potential, that would bring their share of wealth consumption irreversibly and asymptotically closer to consumption by the richest of the rich over time. This condition would not imply equality, only the trend to equality, but when perceptible, would ensure the possibility of harmonious socioeconomic development and peace. Absolute extreme poverty as well as relative extreme poverty would be eradicated, and planetary rescue could then be pursued, essentially through voluntary population stabilization, production and consumption stabilization, and carbon emissions stabilization.
https://www.academia.edu/13062623/Informal_Proof_of_Thomas_Pikettys_Thesis-2014060802

Professor Robert Skidelsky is precisely right; incomes must be made independent from work or personal productivity in the long term in First World countries, and this could be accomplished through tax credits or negative taxation to ensure a living wage for all. Of course, this solution would be more distant in time in the rest of countries. The following draft for "The XXI Century Tax Reform" may prove relevant:
https://www.academia.edu/13062837/La_Reforma_Tributaria_del_Siglo_XXI_The_XXI_Century_Tax_Reform_-_2011100411

Unfortunately, I have little faith in our political systems to react swiftly enough and on sufficient scale and appropriately to the coming and permanent work drought caused by automation, to prevent widespread suffering and loss of life. Assuming they even consider the interests of their populations at all, of course.

One often seen misassumption is that those without job strongly tend to do just nothing, like watching TV all day. This is certainly not the case.

Even people without paid job happily do useful things with the time they have. The engage in voluntary tasks, they produce work on their own, participate in Open Source projects and so on. To some extents I see something like a parallel society coming up, similar to the primary one, just without monetary reward for work. These unpaid workers certainly add to the quality of the society as a whole, so these tax paid incomes are much less a loss than generally assumed.

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I cannot say that I have ever disagreed with Dr. Skidelsky, and today is not the start.

I would only add that perhaps as an adjunct to the plan, the government should provide low paying work to anyone who wants it, there is always something around that needs doing and it would look good on the resume/vitae to be able to say you were working and learning skills.

They could start with painting over graffiti and sprucing up the parks.
..

Do we have a minimum wage/living income problem or has government so restricted economic activity that we aren't creating enough jobs that pay higher than a minimum wage or a perceived living income? Government should not allocate income but do a better job enabling economy rather than restricting it. Why is our economic and social policy led by people with nothing but theoretical perspective, by people with no real world experience? Looking around today it appears the primary motivation of government is to grow more government, not to empower private interests. And one wonders why "developed" economies are so laden with debt they must resort to fiscal and monetary stimulus to keep the game going? I guess the definition of an "advanced" economy is one led by theorists and not by common sense.

I agree with most of your comment. But it is all soon rendered moot by the inexorable advance of automation. By the way, is the economic pressure to advance automation even researched in economics academia, does anyone know?

Increasing the minimum wage would mostly just be transferring money to the workers at McDonalds from the people who eat at McDonalds. How could anyone not expect a tremendous increase in income and wealth inequality after you make the tax rates paid on income such as dividends, capital gains and corporate profits much less than the taxes on wages and eliminate entirely from any taxation 99.9% of all estates from the inheritance tax.

"..Equally unhelpful in terms of addressing the income and wealth inequality which results in the overinvestment cycle that caused the depression are those who emphasize various non-tax factors. Issues such a globalization, single-parent households, marriage trends, outsourcing, free trade, unionization, minimum wage laws, problems with our education system and infrastructure, regulatory policies and financial innovation can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. It is the compounding year after year of the effect of the shift away from taxes on capital income such as dividends over time as the rich get proverbially richer which is the prime generator of inequality..."
http://seekingalpha.com/article/1543642

Only Skidelsky (and his son) would think it is a virtue to disincentivize people to work. Let's all sponge off those who have worked hard to buld up capital or who built up skills and work habits that have raised their pay levels above those who are the working poor. Yes, that sounds like a really great idea! What could possibly go wrong?

What amazing, arrogant, ignorance! The Government can pay for full employment without any of your so called hard workers being penalised. The Government already pays it's bills that way, so it's just as simple to fund full employment. Not doing so is purely a political opinion! There is no fiscal problem. Remember governments used to have policies of full employment!

Minimum wage that is sub-par or that which is insufficient for anyone to make ends meet is clearly a way of ignoring or shying away from the basic commitments that an employer must have to its employees. The employer cannot use it as a plea that these commitments comes in the way of making profits, which are never shared with these people whose salaries are lowly in the first place.

The cardinal rule of the society that profit for the shareholder is good and that for the lowly is bad, may not hold good forever.

This is where minimum wage is stuck in the argument a plenty. But this is changing, when profit sharing will have to be widened.

Foe the last years I’ve been a supporter of a rather bold proposition. The fundamental RIGHT TO WORK.

In our modern society having a job is fundamental for a man’s pride and integrity, I cannot conceive a decent life without the ability of providing for my own subsistence, the integration on our society demand us to have a job. Our values, our education our upbringing demands all of us to have jobs and work.

The society of the plentiful should despise charity, the need to beg for your own subsistence, to give others the power over the way you live. To be truly equals and free a man has to hold a JOB, hence it should be a fundamental right.

in the US, "right to work" is a euphemism for anti-union policies, designed to undermine collective bargaining.

also there should be some clarification. is it a "right to a 14-hour-a-day job" ? what if due to technological advances, we need only 5 hours of work per person per day for everyone to be comfortable? would it be better to have everyone work 5 hours a day, or for some people who feel like it to work 10 hours a day and just give some of the stuff they produce to the rest?

In the age we live in this will not happen. Companies donate to political campaigns which serve their own interests - and it is the interest of every company to have an abundance of cheap labour. Of course, it is a risky game, because working poor and unemployed are a tinderbox - see the French revolution.

You state that in 2008, 5.5 million families received tax credits in the UK, and go on to assume that these families were not receiving a 'living wage', in order to make your point that these are 'working poor'. That is labour/leftist nonsense. Osborne's whole idea is to reduce reliance on state dependency. And, exactly why should workers, regardless of their efforts or commitment, have the same freedom of choice regarding hours and 'conditions' as owners/producers of capital?

See also:

In the first year of his presidency, Donald Trump has consistently sold out the blue-collar, socially conservative whites who brought him to power, while pursuing policies to enrich his fellow plutocrats.

Sooner or later, Trump's core supporters will wake up to this fact, so it is worth asking how far he might go to keep them on his side.

A Saudi prince has been revealed to be the buyer of Leonardo da Vinci's "Salvator Mundi," for which he spent $450.3 million. Had he given the money to the poor, as the subject of the painting instructed another rich man, he could have restored eyesight to nine million people, or enabled 13 million families to grow 50% more food.

While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the US and across the advanced-country world.

The Bollywood film Padmavati has inspired heated debate, hysterical threats of violence, and a ban in four states governed by the ruling Bharatiya Janata Party – all before its release. The tolerance that once accompanied India’s remarkable diversity is wearing thin these days.

The Hungarian government has released the results of its "national consultation" on what it calls the "Soros Plan" to flood the country with Muslim migrants and refugees. But no such plan exists, only a taxpayer-funded propaganda campaign to help a corrupt administration deflect attention from its failure to fulfill Hungarians’ aspirations.

French President Emmanuel Macron wants European leaders to appoint a eurozone finance minister as a way to ensure the single currency's long-term viability. But would it work, and, more fundamentally, is it necessary?

The US decision to recognize Jerusalem as the capital of Israel comes in defiance of overwhelming global opposition. The message is clear: the Trump administration is determined to dictate the Israeli version of peace with the Palestinians, rather than to mediate an equitable agreement between the two sides.